Democrats in the Legislature today proposed a sales tax cut for West Virginians.
West Virginia’s sales tax is currently 6 percent. The Democrats, who announced the policy goal in a news conference, proposed lowering that initially to 4.75 percent with possible reductions after that if the state’s finances are healthy.
“It’s a tax cut for everybody. This helps every single West Virginian. This helps every single West Virginia business,” Senate Minority Leader Stephen Baldwin, D-Greenbrier, said during this morning’s news conference.
Sales tax rates of surrounding states include 6 percent in Kentucky, 6 percent in Maryland, 6 percent in Pennsylvania, 5.75 percent in Ohio and 5.3 percent in Virginia. Most of those states, like West Virginia, also have local sales taxes.
“This proposal would give us the lowest sales tax in the region, and that would give us an advantage over surrounding states,” Baldwin said at the news conference.
The Democrats calculated the sales tax cut would be a $312 million effect on the state’s General Fund.
Baldwin noted that’s in line with the $350 million match that state officials promised last week for investments by Nucor Steel’s capital improvements.
“That is the same amount of money essentially that was given in an incentive to Nucor last week, and we all supported that,” Baldwin said today on MetroNews’ “Talkline.”
— MetroNews (@WVMetroNews) January 18, 2022
Gov. Jim Justice, who last year proposed eliminating the state income tax, has put forward a relatively flat $4.6 billion budget proposal this year.
Observers have noted that it’s challenging to judge what financial conditions might be like in the near future, considering the lingering effects of covid-19 and the influx of federal money to states over the past couple of years.
Anyone assessing the proposed sales tax cut should be cautious, said Kelly Allen, executive director of the West Virginia Budget & Policy.
“I don’t think it’s fiscally responsible to use one-time revenue to fund a permanent tax cut,” Allen said today. “In future years, budget cuts would likely be required to offset any permanent cuts to the general revenue fund — necessarily meaning reductions in funding for schools, health care, and other areas that need more funding — not less.”
Democrats represent the minority party in the Senate and House of Delegates. So passing the tax cut would require buy-in from the Republican majorities.
Baldwin made the pitch for bipartisan cooperation today in comments on the Senate floor.
“We think we’ve come up with an idea we can work with our friends and colleagues across the aisle on,” he said. “We’d be happy to have support, comments, feedback, work with our colleagues from across the aisle on making this better. We would welcome our colleagues to join with us on this effort.”
The Democratic leaders who pitched the tax cut today said they have spoken already with Senate President Craig Blair, R-Berkeley, and is optimistic that the proposal could be considered.
“It’s been discussed with leadership, and I hope it does — I hope this bill ends up on a committee list,” said Senator Richard Lindsay, D-Kanawha.
House Minority Leader Doug Skaff, D-Kanawha, expressed hope that the tax cut could receive bipartisan support.
“It’s time to give back. I think that’s not a Democratic issue or a Republican issue,” he said. “Let’s be creative, work together.”
Delegate Lisa Zukoff, D-Marshall, said she often hears from seniors and people on fixed incomes who would benefit from a tax break on their spending. Zukoff also pointed to an advantage for small businesses on border counties.
“I’m excited to be here this morning, and I hope this can truly be a bipartisan effort, across the board to help all West Virginians,” Zukoff said.
Delegate Jim Barach, D-Kanawha, characterized the sales tax as a regressive tax where people pay the same percentage without regard to their ability to pay. “I think this will make things a little more even for everyone,” he said.
And, he too, said the sales tax reduction could promote activity at retailers across the state.
“Not only will we help people but we’ll help businesses. And this will prime the pump,” he said.